With the fairly recent curiosity of Blockchain technology within the insurance industry, it’s inevitable that smart contracts embedded within blockchain are going to become the norm within the next few years. Blockchain technology is still in its infancy in technology terms. I would compare it to the Internet, but instead of being 2018 it’s still 1994. That does not mean the technology is not sound or ready for prime time, it just means you need to choose a partner that is technology savvy and is just as interested in making your business successful as you are.
Taking advantage of blockchain and smart contracts can be a daunting task for any company. However, if you look for a few key traits in a technology vendor / partner you can increase your likelihood of success.
What blockchain technology is being used?
There is a plethora of blockchain technologies on the market today. All the way from complete open source solutions to high priced commercial solutions. All of them have their own bells and whistles. Some of them have been around for years and some of them are hot off the presses. Just be aware that sometimes the shiny new solution isn’t always the best choice. The power of blockchain is in the number of participants on the network. This means you want your friends and even your enemies to be participating on the same blockchain in order to exchange data. Choosing a blockchain technology because it’s bleeding edge and cool tech for the guy coding with the sunglasses on in the dark room isn’t a successful business partnership strategy. Make sure the software you are going to be using is built using blockchain technology that is proven and deployed in the market today. There will be a time down the road to upgrade to the newest blockchain technology when it becomes the mainstream technology of choice.
What is their upgrade strategy for the smart contracts they create?
Smart contracts are going to be the way most contracts are done in the future. Gone are the days of passing hundreds of revisions back and forth via Microsoft word and then printing, scanning and faxing them to multiple parties. The power of a smart self-executing contract can’t be denied. However, with great power comes great responsibility, right? Inevitably, your contracts are going to need to be upgraded over time. It may be because of a code bug the smart contract developer created, a change in terms over the years or because some new must have technology came to the market. There are a multitude of reasons you may have to upgrade. The point is you must plan for that in advance and have a strategy for when it comes. All blockchain technologies provide a method for upgrading the contracts, but some of those methods are very error prone and, in some cases, make your software more vulnerable thus removing some of the power of the smart contract. Ask up front what the upgrade strategy is. If it involves proxies or rip and replace methodologies, you should consider finding another partner.
Is secure coding part of their development process?
Everyone has heard that blockchain can’t be hacked right? Well that may be true, but one thing that is true is that the software using the blockchain can be hacked. Just because your deploying blockchain doesn’t mean you can avoid secure coding practices. There are still thousands of flaws and vulnerabilities in cloud-based software. It is imperative that software manufacturers practice good coding practices. Every piece of software in the healthcare industry should have a static code analysis strategy, a web penetration testing strategy, and a vulnerability scanning strategy. More mature software will even have a crowd sourced bug bounty program where third parties are motivated to act like a hacker to find flaws and vulnerabilities. If your technology partners can’t talk in detail about their strategy you should run away fast. Nobody wants to be on the front page of the newspaper because of a software flaw created by a partner that didn’t practice secure coding principles.
Find a partner, not a vendor
As I mentioned earlier, there is no shortage of blockchain technologies or vendors on the marketplace. The secret sauce is finding the blockchain technology vendor that wants to be your partner not just your vendor. I once had a co-worker say, “It’s software, everything is possible”. This is very true, however, just because it’s possible doesn’t mean it should be done. A good partner will try to work alongside you to know your business as well as you do. They will also be willing to guide you to stay within the rails of what is not only possible, but also what is practical. The right partner will act and feel like they work for you and your company. They will be honest and feel the same pain you do when there is a bug or an issue and be there with you to celebrate when there are successes. After all, their livelihood should and does depend on your success and satisfaction.